Our objective is to develop a state-of-the-art technology to provide estimates of future financial liability for organizations such as social health maintenance organizations (SHMOs) and small insurance companies who offer long term care benefits. (SHMOs are HMOs which also provide long term care services.) Estimating the future financial liabilities of an organization requires forecasts of the need for long-term care services. This means that complex interactions of health and disability status over time must be modeled. The project will also provide disaggregate estimates of effects for various groups in the population, allow various public and private responses and policies to be explored. The methodology will allow realistic economic assumptions to be incorporated into the projections. SHMOs and retirement communities need this type of information and therefore represent potential markets. Data sources will include the National Institute of Aging's longitudinal study of aging.